Please note that it does not require rangebars. Just 123PatternsV6 on normal charts will give 123Alarms everything it needs.

The chart must be in the active window (active MT4 profile) for processing to occur and the alarm to activate. If you switch away to a different MT4 profile then the alarm will be mute because that chart is not being processed any more.

You can make your own .WAV sound files to be used with the alarm.

Hope that all makes sense ?

Robdee

PS Please take a moment to vote use the Rating: dropdown (all the way at the top of the thread reader on the right hand side). This is a simple way for readers to participate - Thanks.

A sell zone is not an exact price line. Rather it is a broad 'zone' or range of prices roughly 10 pips high. I like to think of it as colouring with a crayon. It is not a precise to the pip area, it is a 'zone'.

Use the MT4 menu Insert.Shapes.Rectangle. Start drawing just above and to the left of a red arrow, drag the rectangle down to cover all of the arrow and across to the right to form a long thin horizonal rectangle.

I set the rectangle properties as below

Attached Image

Here is an example of three sell zones at the end of October.

Attached Image (click to enlarge)

The most successful sell zones will occur after the bulls have had a successful run up to a new high. They still think they are winning even after the first bearish 123-break. That is when they (the overconfident bulls) are going to push back into the sell zone filling my sell limit orders.

Robdee

PS Support questions about my custom indicators and EAs should not be posted in this thread. Please contact me by FF private message or email.

Also welcome two junior members xalson and davidtrader. Your very first post was made in this thread. Looks like something here motivated you to join FF and make a post - great

At this early stage of the thread I am describing the basic ideas that went into the indicator when we were developing it a year ago. These concepts should appear in most any discussion of 123 patterns. Different authors will use different terms to describe what is essentially the same price behaviour and the same analysis. This can be confusing.

What I have been trying to do is use clear and consistent terms that then provide a foundation for our further discussion. If you use the same terms that I do then confusion (in this thread) will be avoided.

Summary of Terms
Terms used in the first four main posts are underlined below.

I noticed that the sell zones seem to be higher (on a short) then the price you would have entered on an aggressive break entry. Is that correct.

Ignored

Yes that is correct. Aggressive entry prices are below 2. The red arrow points to the very first candle to close below price point 2. I see an aggressive entry as the open price of the following candle. Break candle closes, arrow has printed, market order now - no hesitation.

Conservative entries wait for price to break and then move higher into the range above 2 (and normally below 3). This is what the sell zone represents. An area of future selling interest as opposed to immediate selling interest. As the charts show, there are many situations where price action does not return into the sell zone and the conservative entry is not achieved. This can usually be explained by strong bearish pressure overwhelming the bulls.

I'm going to discuss this right now because it is an area of weakness and certainly needs improving. Determining a good price level for the sell zone has been problematic. Last year I tried all sorts of ideas for the placement of the arrows (which act as a guide for the sell zones).

123PatternsV6 prints arrows using the following calculation.

SellArrow[shift] = High[shift]+(High[shift]-Low[shift])/3;

In other words look at the breaking candle. Calculate the range (size) of that candle (range=high-low). Divide that range by 3. Add that value to the high and print the arrow at that price.

In effect the arrows are printed above the breaking candle at a variable distance from the candle (1/3 of the candle height).

If the candle size is large then arrow will be further above. If the candle size is small the arrow will be lower. In other words if there is a lot of momentum we expect a stronger pullback. Assuming that the bulls don't give up the fight.

Blue arrows are the mirror image of this. They are printed below the breaking candle at a variable distance (1/3 of the candle height).

Why am I so interested in sell zones? The reason is I can see a time when I'm going to be searching for liquidity. If I can find a place where the bulls are overconfident and buying into my sell orders for significant periods of time then liquidity will not become a limiting factor.

OK, any more questions?

Robdee

Note: I have been out on my own with this sell zone thing because most participants in the old thread (last year) were using aggressive entries.

Davidtrader, good to see your chart posting. What I notice right away is your chart is one hour (H1) timeframe. That means the distance between 123 price points is huge, like 100+ pips. Which means in theory that appropriate stops are going to be pretty large too, so as to fit the pattern size of H1.

As a learning exercise I suggest using 5 min timeframe. You'll get a lot more practice because patterns come along more frequently. Plus you will not need more than 20 pip stops operating at that level.

See below my labels on the EURUSD H1 pattern that you posted.

Attached Image (click to enlarge)

Stop Losses - What I do

Stop losses are best left to personal preference. Your stop management needs to match your own trading personality. However, I will explain what I do.

My approach to stops is to take me out fast if I am wrong. So I simply use a 20 pip stop in all situations. If I haven't selected the right entry price (within a 20 pip margin of error) then I want to be taken out quickly. This clears my mind of the bad trade and allows me to re-evaluate without the emotional pressure of being stuck in a losing position.

Often I will chase an entry down getting taken out at 20 pip intervals until I find a better entry that holds. Although this cuts into profits pretty deeply it is the way I like to operate. That is, keep pruning out bad trades until I find a place where I can "buy and hold" for 100 pips.

Now there are a couple of other things I do with stops. As soon as price moves to +20 above my entry price I move the stop from -20 to breakeven. This means that if price bounces back against me I lose nothing.

When price moves to +50 above my entry price I start trailing pip for pip. This means my stop keeps moving up (trailing) 50 pips below the most recent high. This means if my TP target is not reached I'll still bank some pips.

Hope that helps. Would be good if experienced traders share their own stop loss rules in this thread.